I'm having a bit of a problem following your narrative, but I think you want to make a bootable SD card to install Lion onto your old computer. I don't know where your Lion installer DMG comes from but you cannot download it from the App Store. You can purchase Lion at the Online Apple Store. The cost is $19.99 (as it was before) plus tax. It's a download. You will get an email containing a redemption code that you then use at the Mac App Store to download Lion. Save a copy of that installer to your Downloads folder because the installer deletes itself at the end of the installation.
Too make a bootable installer:
Mount the Lion Installer.dmg file.
Double-click on the Lion Installer's Desktop icon.
In the Finder window locate a file named, "InstallESD.dmg", and drag it to the Desktop.
Open Disk Utility and clone the InstallESD.dmg to your properly formatted SD card.
The SD card must be at least 8GBs and partitioned using GUID and formatted Mac OS Extended, (Journaled.) I'm assuming your computer has an SD slot and will boot from an SD card. Otherwise, do this on a USB 2.0 flash drive.
Here's the long version:
Make Your Own Lion Installer
1. After downloading Lion you must first save the Install Mac OS X Lion application. After Lion downloads DO NOT click on the Install button. Go to your Applications folder and make a copy of the Lion installer. Move the copy into your Downloads folder. Now you can click on the Install button. You must do this because the installer deletes itself automatically when it finishes installing Lion.
2. Get a USB flash drive that is at least 8 GBs. Prep this flash drive as follows:
- Open Disk Utility in your Utilities folder.
- After DU loads select your hard drive (this is the entry with the mfgr.'s ID and size) from the left side list. Note the SMART status of the drive in DU's status area. If it does not say "Verified" then the drive is failing or has failed and will need replacing. SMART info will not be reported on external drives. Otherwise, click on the Partition tab in the DU main window.
- Under the Volume Scheme heading set the number of partitions from the drop down menu to one. Set the format type to Mac OS Extended (Journaled.) Click on the Options button, set the partition scheme to GUID then click on the OK button. Click on the Partition button and wait until the process has completed.
- Select the volume you just created (this is the sub-entry under the drive entry) from the left side list. Click on the Erase tab in the DU main window.
- Set the format type to Mac OS Extended (Journaled.) Click on the Options button, check the button for Zero Data and click on OK to return to the Erase window.
- Click on the Erase button. The format process can take up to several hours depending upon the drive size.
3. Locate the saved Lion installer in your Downloads folder. CTRL- or RIGHT-click on the installer and select Show Package Contents from the contextual menu. Double-click on the Contents folder to open it. Double-click on the SharedSupport folder. In this folder you will see a disc image named InstallESD.dmg.
4. Plug in your freshly prepared USB flash drive. You are going to clone the InstallESD.dmg disc image to the flash drive as follows:
- Open Disk Utility.
- Select the USB flash drive from the left side list.
- Click on the Restore tab in the DU main window.
- Check the box labeled Erase destination.
- Select the USB flash drive volume from the left side list and drag it to the Destination entry field.
- Drag the InstallESD.dmg disc image file into the Source entry field.
- Double-check you got it right, then click on the Restore button.
When the clone is completed you have a fully bootable Lion installer that you can use without having to re-download Lion.
